this post was submitted on 04 Sep 2024
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OpenAI is burning billions of dollars not making profit.
Sounds like they are operating the same as all the other big tech companies then
Burn a ton a cash to become the only major player in the market and the proceed to enshitify as no one else has anywhere to go.
Wrong
https://futurism.com/the-byte/openai-copyrighted-material-parliament
Eh? That article says nothing about their profit margins. Today they have something like $3.5B in ARR (not really, that's annualized from their latest peak, in Feb they had like $2B ARR). Meanwhile they have operating costs over $7B. Meaning they are losing money hand over fist and not making a profit.
I'm not suggesting anything else, just that they are not profitable and personally I don't see a road to profitability beyond subsidizing themselves with investment.
It's in the first bloody paragraph. 😮💨
And if you follow the link the title of the article says it all:
#OpenAI is set to see its valuation at $80 billion—making it the third most valuable startup in the world
Just because the company has a high valuation, doesn't mean they're making a profit. They're indeed losing a lot of money and will go bankrupt if they don't get new investment and/or increase their ARR soon. Right now, they've only got 12 months left before they're out of money. https://www.windowscentral.com/software-apps/openai-could-be-on-the-brink-of-bankruptcy-in-under-12-months-with-projections-of-dollar5-billion-in-losses
The valuation is based on the expectation of the company to make massive profits. And if you think investor money is not profit for the people running Open AI, you're crazy. We could only hope that they run out of money and go out of business. But that'll never happen now with the amount of faith these corporations are putting in "AI" research.
I take it you don't understand how startups work?
OpenAI is not making any profit and is losing money hand over fist today. Valuation and raising investment rounds isn't profit.